DCIT, New Delhi V. M/s. Saamag Infrastructure Ltd., New Delhi

ITA 2600/DEL/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9286 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 30-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Unexplained expenditure; Loose papers; Document seized; Period of limitation; Retrospective amendment; Additional evidence; Question of law; Deemed dividend; Assessment record; Onus to prove; Documents seized; Set aside
• Section: 69C; 92C; 143(3); 142(1); 153A; 2(22)(e); 143(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2599/DEL/2014 AY 2006-07 DCIT, CC-10, VS. SAAMAG CONSTRUCTION LTD. NEW DELHI B-67, SARITA VIHAR, NEW DELHI (PAN: AAHCS8522R) ITA NO. 2600/DEL/2014 AY 2007-08 DCIT, CC-10, VS. SAAMAG INFRASTRUCTURE LTD. NEW DELHI B-67, SARITA VIHAR, NEW DELHI (PAN: AAJCS5438A) ITA NO. 2603/DEL/2014 AY 2007-08 DCIT, CC-10, VS. SAGA DEVELOPERS (P). LTD. NEW DELHI B-67, SARITA VIHAR, NEW DELHI (PAN: AAJCS4932K) ITA NO. 4058/DEL/2015 AY 2011-12 DCIT, CC-19, VS. SAAMAG DEVELOPERS LTD. NEW DELHI B-67, SARITA VIHAR, NEW DELHI (PAN: AAJCS4952R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. M.P. RASTOGI, ADV. DEPARTMENT BY : SH. S.S. RANA, CIT(DR) 2 ORDER PER H.S. SIDHU, JM THE REVENUE HAVE FILED THESE 04 APPEALS AGAINST TH E RESPECTIVE ORDERS OF THE LD. CIT(A), NEW DELHI IN RESPECT OF 0 4 DIFFERENT ASSESSEES PERTAINING TO ASSESSMENT YEAR 2006-07, 2007-08 & 20 11-12. SINCE THE GROUNDS RAISED IN SOME OF THE APPEALS ARE COMMON AN D IDENTICAL, HENCE, THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPO SED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALIN G WITH ITA NO. 2599/DEL/2014 (AY 2006-07). 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA N O. 2599/DEL/2014 (AY 2006-07) IN THE CASE OF DCIT VS. SAAMAG CONSTRU CTION LTD.:- 1. THAT THE CIT(A) ERRED IN ADMITTING ADDITIONAL E VIDENCE UNDER RULE 46A. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 1,63,41,365/- ON ACCOU NT OF UNEXPLAINED EXPENDITURE U/S. 69C. 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 2,04,01,195/- MADE BY AO U/S. 2(22)(E) OF THE INCOME TAX ACT, 1961. 4(A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE C OURSE OF THE HEARING OF THE APPEAL. 3 3. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA N O. 2600/DEL/2014 (AY 2007-08) IN THE CASE OF DCIT VS. SAAMAG INFRAST RUCTURE LTD.:- 1. THAT THE CIT(A) ERRED IN ADMITTING ADDITIONAL E VIDENCE UNDER RULE 46A. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 2,80,31,778/- ON ACCOU NT OF UNEXPLAINED EXPENDITURE U/S. 69C. 4(A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 4. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA NO . 2603/DEL/2014 (AY 2007-08) IN THE CASE OF DCIT VS. SAGA DEVELOPER S (P) LTD.:- 1. THAT THE CIT(A) ERRED IN ADMITTING ADDITIONAL E VIDENCE UNDER RULE 46A. 2. THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 26,40,000/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C. 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS. 40,23,220/- ON ACCOUNT OF CASH PAYMENT FOR PURCHASE OF LAND. 4(A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT T ENABLE IN LAW AND ON FACTS. 4 (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE C OURSE OF THE HEARING OF THE APPEAL. 5. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN ITA NO . 4058/DEL/2015 (AY 2011-12) IN THE CASE OF DCIT VS. SAAMAG DEVELOP ERS LTD.:- 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACTS IN HOLDING THAT THE NOTICE U/S. 142(1) WAS NOT SERVED UPON THE APPELLANT WITHIN PRESCRIBED TIME LIMIT. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN THE QUASHING THE ASSESSMENT ORDER PASSED BY AO U/S. 143(3) AS NULL AND VOID. 3. (A) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B)THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 6. THE FACTS IN ALL THE APPEALS ARE COMMON AND IDEN TICAL AND GROUND NO. 1, 2 ARE EXACTLY THE SAME IN APPEAL NO. 2599/DE L/14, 2600/DEL/14 & 2603/DEL/14, HENCE FOR THE SAKE OF CONVENIENCE WE ARE DEALING WITH THE FACTS OF ITA NO. 2599/DEL/2014 (AY 2006-07) IN THE CASE OF DCIT VS. SAAMAG CONSTRUCTION LTD. 7. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND S EIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961 (IN SHORT AC T) WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT ON 29.1.20 09 IN THE CASE OF M/S SAMMAG GROUP OF CASES. THE ASSESSEE COMPANYS BUSI NESS PREMISES AT 5 B-67, SARITA VIHAR, NEW DELHI 44 WAS ALSO COVERED U/S. 132(1) OF THE ACT. NOTICE U/S. 153A OF THE ACT WAS ISSUED TO T HE ASSESSEE ON 10.7.2009. IN RESPONSE TO THE SAID NOTICE, RETURN DECLARING AN INCOME OF RS. 6,51,670/- WAS FILED ON 19.2.2010. NOTICES U/S . 143(2) AND 142(1) OF THE ACT WERE ISSUED ALONGWITH A QUESTIONNAIRE DATED 31.8.2010. DUE TO CHANGE OF INCUMBENCY FRESH NOTICES U/S. 143(2) AND 142(1) WERE AGAIN ISSUED ON 20.10.2010 AND FIXED FOR HEARING ON 29.10 .2010. IN RESPONSE TO VARIOUS STATUTORY NOTICES, THE AR OF THE ASSESSEE A TTENDED THE PROCEEDINGS ALONGWITH REPRESENTATIVE OF THE ASSESSE E COMPANY AND FURNISHED NECESSARY DETAILS, INFORMATION AND DOCUME NTS CALLED FORM TIME TO TIME. DURING THE ASSESSMENT PROCEEDINGS, AO OBS ERVED THAT THERE WAS COMPLEXITY IN ACCOUNTS OF THE ASSESSEE, THEREFORE, AFTER OBTAINING PRIOR APPROVAL OF THE COMMISSIONER OF INCOME TAX, CENTR AL II, NEW DELHI, DIRECTIONS FOR SPECIAL AUDIT U/S. 142(2A) OF THE AC T WERE ISSUED TO EH ASSESSEE TO GET HIS ACCOUNTS AUDITED FROM M/S TR CHADHA & CO., B-30, CONNAUGHT PLACE, NEW DELHI. THE ASSESSEE WAS ASKED TO FURNISH SUCH AUDIT REPORT U/S. 142(2A) WITHIN A PERIOD OF 60 DAY S FROM THE DATE OF RECEIPT OF THESE DIRECTIONS. THE ASSESSEE HAS FURN ISHED SPECIAL AUDIT REPORT U/S. 142(1) ON 06.6.2011. AFTER PERUSAL OF SPECIAL AUDIT REPORT FILED BY THE ASSESSEE, FRESH QUESTIONNAIRE ALONGWIT H NOTICE U/S. 142(1) WERE ISSUED TO THE ASSESSEE ON 10.6.2011 AND CASE W AS FIXED FOR 17.6.2011. IN RESPONSE TO NOTICES ISSUED, ASSESSEE S COUNSEL HAS ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO T IME ALONGWITH 02 EMPLOYEES OF THE ASSESSEE COMPANY. AFTER EXAMINATI ON OF REPLIES/DETAILS 6 AND AUDIT REPORT FILED U/S. 142(2A), THE ASSESSMENT WAS COMPLETED U/S. 153A/143(3) OF THE ACT VIDE ORDER DATED 03.8.2011 A T RS. 4,34,09,680/- AND VARIOUS ADDITIONS HAVE BEEN MADE. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VI DE HIS IMPUGNED ORDER DATED 26.2.2014 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. LD. CIT(DR) RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE. IN SUPPORT OF HIS CONTENTION, HE FILED T HE WRITTEN SUBMISSION WHICH READ AS UNDER:- WITH REGARD TO ADDITION U/S 2(22)(E), IT IS HUMBLY SUBMITTED AS FOLLOWS: 1. THE ONUS IS UPON THE ASSESSEE THAT THE AMOUNT WA S ADVANCED & SUBSEQUENTLY UTILIZED FOR THE PURPOSE OF BUSINESS. THIS ONUS HAS NOT BEEN DISCHARGED. IT HAS NOT BEEN SHOWN HOW THIS AMOUNT WAS UTILIZED IN SUBSEQUE NT YEARS WITH REGARD TO ADDITION U/S 69C, IT IS HUMBLY SUBMITTED AS FOLLOWS: 1. IN VIEW OF THE PROVISIONS OF SECTION 132(4A) & 2 92C OF I.T. ACT, THE ONUS IS UPON THE ASSESSEE THAT THE EXPENDITURE RECORDED IN THE SEIZED PAPERS IS RECONC ILED WITH ITS BOOKS OF ACCOUNT. THIS ONUS HAS NOT BEEN 7 DISCHARGED. THE LD.CIT(A) HAS MERELY AND INCORRECTL Y ACCEPTED CONTENTION OF THE ASSESSEE THAT THEY WERE MERELY PROPOSALS. RELIANCE IS PLACED ON DECISIONS MENTIONED BELOW. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH REGARD TO PRESUMPTION OF ENTRIES FOUND RECORDED IN BOOKS OF ACCOUNT SEIZED DURING SEARCH AS PER SECTIO NS 132(4A) & 292C OF I.T. ACT: 1. CIT VS SONAL CONSTRUCTION [2012-TIOL-851-HC-DEL- IT1 (DELHI) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD AS FOLLOWS: THE TRIBUNAL HAS ALSO HELD THAT THE PRESUMPTION AB OUT THE GENUINENESS AND TRUTH OF THE CONTENTS OF THE DOCUMENTS SEIZED, AS PROVIDED IN SECTION 132(4A), W AS NOT AVAILABLE TO THE AO IN THE ASSESSMENT PROCEEDIN GS. THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF P. R. METRANI, NO DOUBT HELD THAT THE PRESUMPTION WAS NOT AVAILABLE TO THE AO WHILE COMPLETING THE ASSESSMENT AND THAT IT WAS LIMITED TO THE PRIOR PROCEEDINGS IN CONNECTION WITH THE SEARCH. HOWEVER, THERE WAS A LA TER STATUTORY AMENDMENT; SECTION 292C WAS INTRODUCED BY 8 THE FINANCE ACT, 2007 WITH RETROSPECTIVE EFFECT FRO M 1.10.1975; ++ THE PHRASE IN ANY PROCEEDING UNDER THIS ACT IN SUB-SECTION (1) TO SECTION 292C ARE IMPORTANT. THEY PERMIT THE AO TO INVOKE THE PRESUMPTION THAT THE SE IZED DOCUMENTS BELONGED TO THE PERSON SEARCHED, THAT THE CONTENTS OF THE SEIZED DOCUMENTS/BOOKS OF ACCOUNTS ARE TRUE AND THAT THE SIGNATURE OF EVERY OTHER PART OF THE BOOKS OF ACCOUNTS OR DOCUMENTS WHICH PURPORTS TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THA T PERSON'S HANDWRITING ETC., EVEN IN THE ASSESSMENT PROCEEDINGS. AFTER THE INSERTION OF THE SECTION, TH E JUDGMENT OF THE SUPREME COURT CITED ABOVE CAN NO LONGER BE CALLED IN AID TO HOLD THAT THE PRESUMPTIO N IS NOT AVAILABLE TO THE AO IN MAKING THE ASSESSMENT; ++ THE TRIBUNAL HAS REASONED THAT THE SEIZED PAPERS ARE LOOSE PAPERS AND NOT BOOKS OF ACCOUNTS. WE ARE UNABLE TO APPRECIATE THE SIGNIFICANCE OR SEQUITUR O F THE STATEMENT MADE BY THE TRIBUNAL. IT IS NOT NECESSARY THAT THE SEIZED DOCUMENTS SHOULD BE IN THE FORM OF PROPE R BOOKS OF ACCOUNTS SO THAT THEY CAN BE RELIED UPON F OR THE PURPOSE OF MAKING ADDITIONS. THEY COULD BE IN A NY FORM, INCLUDING LOOSE PAPERS ON WHICH NOTINGS OR 9 SCRIBBLINGS HAVE BEEN MADE. WHILE COMMENTING ON THE SEIZED DOCUMENTS, THE TRIBUNAL CONTRADICTED ITSELF BY FIRST OBSERVING THAT IT CANNOT BE STATED THAT THE F IGURES IN THE PAPERS WERE THE ACTUAL INVESTMENT OR THE ACT UAL SALE PROCEEDS AND THEREAFTER, IN THE VERY NEXT SENT ENCE, STATING THAT THE SEIZED DOCUMENTS DID GIVE OUT CER TAIN FIGURES REGARDING THE FOUR PROJECTS THAT THE ASSESS EE HAD UNDERTAKEN IN THE COURSE OF HIS BUSINESS. IF THE SEIZED PAPERS DID IN FACT CONTAIN FIGURES RELATING TO THE FOUR PROJECTS WHICH WERE ADMITTEDLY UNDERTAKEN BY T HE ASSESSEE, WE DO NOT SEE HOW THE TRIBUNAL COULD HOLD THAT THE REVENUE COULD NOT RELY ON THE CORRELATION BETWEEN THE POSITION SHOWN BY THE SEIZED DOCUMENTS AND WHAT HAS BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE TRIBUNAL DOES NOT DISPUTE THA T THERE EXISTED A CORRELATION; BUT IT YET HELD THAT T HE CORRELATION ALONE WAS NOT SUFFICIENT TO MAKE THE IMPUGNED ADDITIONS. THIS OBSERVATION WAS SOUGHT TO BE SUPPORTED BY SOME REASONS; ++ AN EXAMINATION OF THOSE REASONS SHOWS THAT THEY ARE FAR FROM CONVINCING. THE TRIBUNAL HELD ON THE B ASIS OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF P.R. METRANI THAT THE PRESUMPTION ABOUT THE TRUTH A ND GENUINENESS OF THE CONTENTS OF THE SEIZED DOCUMENTS 10 AND ITS HANDWRITING WAS NOT AVAILABLE TO THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THIS POSITION HAS NOW BEEN NULLIFIED BY THE RETROSPECTIVE AMENDMENT. EVEN OTHERWISE, THERE IS NO MERIT IN THE CONCLUSION OF THE TRIBUNAL THAT THE CORRELATION BETWEEN THE SEIZE D MATERIAL AND THE BOOKS OF ACCOUNT, ON WHICH RELIANC E WAS PLACED BY THE AO, WAS NOT SUFFICIENT FOR THE PU RPOSE OF MAKING THE ADDITIONS; 2- CIT VS NARESH KUMAR AGGARWALA [2011] 9 TAXMANN.COM 249 (DELHI)/[2011] 198 TAXMAN 194 (DELHI/[2011] 331 ITR 510 (DELHI) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT THERE WAS A PRESUMPTION RAISED UNDER SECTION 132(4A) ON SEIZURE OF FAX MESSAGE AND IT WAS UPON ASSESSEE TO REBUT THAT PRESUMPTION BY OFFERING A PLAUSIBLE EXPLANATION. 3- MAHABIR PRASAD RUNQTA VS CIT [2014] 43 TAXMANN.COM 328 (JHARKHAND)/R20141 266 CTR 175 (JHARKHAND) (COPY ENCLOSED) WHERE HONBLE JHARKHAND HIGH COURT HELD THAT LOOSE SHEETS SEIZED DURING SEARCH SOMETIMES CONTAIN VALUA BLE INFORMATION AND THUS THOSE ARE TO BE REGARDED AS 1 DOCUMENTS' WITHIN MEANING OF SECTION 158B(B). THERE IS PRESUMPTION RAISED UNDER SECTION 132(4A) REGARDING 11 DOCUMENTS SEIZED AND IN LIGHT OF SUCH PRESUMPTION, ASSESSEE OUGHT TO HAVE PRODUCED OTHER DOCUMENTS TO DISPROVE ENTRIES MADE IN LOOSE SHEETS. 4. BHAGHEERATHA ENGINEERING LTD VS ACIT T20171 79 TAXMANN.COM 325 (KERALA)/F20151 379 ITR 244 (KERALA)/R20161 282 CTR 209 (KERALA) (COPY ENCLOSED ) WHERE HONBLE KERALA HIGH COURT HELD THAT IN VIEW O F INTRODUCTION OF SECTION 158BH PRESUMPTION UNDER SECTION 132(4A) REGARDING OWNERSHIP OF SEIZED ASSET S WAS NOT LIMITED TO PROCEEDINGS FOR SEARCH AND SEIZU RE UNDER SECTION 132, AND WAS ALSO AVAILABLE FOR FRAMI NG REGULAR ASSESSMENT. 5 ASHOK KUMAR VS CAT T20161 69 TAXMANN.COM 129 (PATNA) /[2016] 239 TAXMAN AT (PATNA[2016] 386 ITR 342 (PATNA)/R20161 290 CTR 450 (PATNA) (COPY ENCLOSED) WHERE HON'BLE PATNA HIGH COURT HELD THAT WHERE ASSESSING OFFICER PASSED INCOME ESCAPING ASSESSMENT ON BASIS OF A LOOSE SHEET FOUND IN PREMISES OF FATH ER OF ASSESSEE, ACTION OF ASSESSING OFFICER WAS JUSTIFIED BEING BASED ON RELEVANT MATERIAL AND, MERELY, BECAUSE HE USED WRONG PRESUMPTION IN ASSESSMENT ORDER IT WOULD NOT CHANGE NATURE OF ORDER. 12 6 BALDEV RAJ VS CIT R2010L 2 TAXMANN.COM 335 (PUNJA B & HARYANA) ENCLOSED) ASSESSEE SUBMITTED THAT PRESUMPTION UNDER SECTION 132(4A) OF THE ACT WAS REBUTTABLE AND THE ASSESSEE LED EVIDENCE TO REBUT THE SAID PRESUMPTION. THERE IS NO DISPUTE ABOUT THE PROPOSITION THAT PRESUMPTION CAN BE REBUTTED NOR THE TRIBUNAL HAS HELD TO THE CONTRARY. THE TRIBUNAL HAS HELD THAT THE ASSESSEE FAILED TO REBUT THE PRESUMPTION, WHICH IS PURELY A FINDING OF FACT. HON 'BLE PUNJAB & HARYANA HIGH COURT HELD THAT NO SUBSTANTIA L QUESTION OF LAW ARISES FROM THE IMPUGNED ORDER. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH REGARD TO ACCEPTANCE OF ADDITIONAL EVIDENCE IN VIOL ATION OF RULE 46A OF I.T. RULES: 1. CIT VS. MANISH P.NID WELL (P.) LTD [16 TAXMANN.CO M 27, 204 TAXMAN 106, 245 CTR 397 (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD WHERE ADDITIONA L EVIDENCE WAS ADMITTED AND ACCEPTED AS GENUINE AT FI RST APPELLATE STAGE WITHOUT ASSESSING OFFICER FURNISHIN G HIS COMMENTS AND WITHOUT VERIFICATION, REQUIREMENT OF R ULE 46A(3) WERE NOT SATISFIED. 13 2. CIT VS. JANSAMPARK ADVERTISING & MARKETING (P.) LTD (56 TAXMANN.COM 286, 231 TAXMAN 384. 375 ITR 373) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT IN CASE OF UNACCOUNTED ENTRIES FOUND IN BOOKS OF ACCOUNT OF ASSESSEE, THOUGH IT IS OBLIGATION OF ASS ESSING OFFICER TO CONDUCT PROPER SCRUTINY OF MATERIAL, IN EVENT OF ASSESSING OFFICER FAILING TO DISCHARGE HIS FUNCT IONS PROPERLY, OBLIGATION TO CONDUCT PROPER INQUIRY SHIF TS TO COMMISSIONER (APPEALS) AND TRIBUNAL AND THEY CANNOT SIMPLY DELETE ADDITION MADE BY ASSESSING OFFICER ON GROUND OF LACK OF INQUIRY 3- ACIT VS MOHAR SINAH (16 TAXMANN.COM 37. 49 SOT 129. 137 TTJ 654) (COPY ENCLOSED) WHERE HONBLE JODHPUR HIGH COURT HELD THAT WHERE ASSESSEE FILED AN APPLICATION UNDER RULE 46A, COMMISSIONER (APPEALS) MUST DISPOSE OF THE APPLICAT ION BY WAY OF A REASONED ORDER AND THEREAFTER PROCEED T O DISPOSE OF APPEAL ON MERITS IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH REGARD TO DEEMED DIVIDEND U/S 2(22)(E) OF I.T.ACT: 1 MISS P. SARADA VS CIT [96 TAXMAN 11, 229 ITR 444. 144 CTR 2091 (COPY ENCLOSED) 14 WHERE HONBLE SUPREME COURT HELD THAT ADVANCES MADE BY COMPANY TO ASSESSEE WOULD HAVE TO BE TREATED AS DEEMED DIVIDENDS PAID ON DATES WHEN WITHDRAWALS WER E ALLOWED TO BE MADE AND SUBSEQUENT ADJUSTMENT OF ACCOUNT MADE ON VERY LAST DAY OF ACCOUNTING YEAR WO ULD NOT ALTER POSITION THAT ASSESSEE RECEIVED NOTIONAL DIVIDENDS ON VARIOUS DATES. CIT VS MISS P. SARADA T21 TAXMAN 941 (COPY ENCLOSED ) WHERE HONBLE MADRAS HIGH COURT HELD THAT AMOUNT OF IMPUGNED EXCESS WITHDRAWALS, EVEN THOUGH ADJUSTED AGAINST CREDIT BALANCE BEFORE CLOSE OF YEAR, WAS ASSESSABLE AS DEEMED DIVIDEND IN ASSESSEE'S HANDS I N TERMS OF SECTION 2(22)(E) 2- PUNEET BHAGAT V. ITO [157 ITD 353) WHERE HONBLE ITAT DELHI HELD THAT DEEMED DIVIDEND- LOANS AND ADVANCES TO SHARE HOLDERS- LOANS RECEIVED BY THE COMPANY WOULD BE TREATED AS DEEMED DIVIDEND IN HANDS OF P AND S IN PROPORTION TO THEIR SHAREHOLDIN GS. 3. SUNIL KAPOOR VS CIT T20151 63 TAXMANN.COM 97 (MADRAS)/R20151 235 TAXMAN 279 (MADRAS) WHERE HONBLE MADRAS HIGH COURT HELD THAT WHERE ASSESSEE, HOLDING 60 PER CENT SHARES OF A COMPANY, 15 TOOK PERSONAL LOAN FROM ACCUMULATED SURPLUS OF SAID COMPANY, SAID AMOUNT WOULD BE TREATED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E), AFTER REDUCING THEREFROM AMOUNT REPAID BY ASSESSEE DURING YEAR 4. SHASHI PAL AAARWAL VS CIT T20151 54 TAXMANN.COM 289 (ALLAHABAD)/R2015] 229 TAXMAN 307 (ALLAHABAD)/R2015L 370 ITR 720 (ALLAHABAD) WHERE HONBLE ALLAHABAD HIGH COURT HELD THAT WHERE LENDING OF MONEY WAS NOT PART OF BUSINESS OF LENDIN G COMPANIES, LOAN/ADVANCE GIVEN TO ASSESSEE- SHAREHOLDER WOULD BE TREATED AS DEEMED DIVIDEND UND ER SECTION 2(22)(E) 5. CIT V SUNIL CHOPRA R20111 12 TAXMANN.COM 496 (DELHI)/[2011] 201 TAXMAN 316 (DELHI) [2011] 242 CT R 498 (DELHI) TRIBUNAL DELETED ADDITION ACCEPTING ASSESSEE'S CONTENTION THAT SAID ADVANCES WERE RECEIVED AGAINST SALE OF PROPERTY UNDER TERMS OF AGREEMENT DATED 18- 9- 2003 AND, THEREFORE, MONEY WAS TAKEN BY ASSESSEE IN LINE OF HIS BUSINESS OF REAL ESTATE. HONBLE DELHI HIGH COURT HELD THAT THERE WAS GREAT PERVERSITY AND INFI RMITY IN FINDINGS AND OBSERVATIONS OF TRIBUNAL AND, THERE FORE, IMPUGNED ORDER WAS TO BE SET ASIDE. 16 9. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASS ED A WELL REASONED ORDER, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS TH E WRITTEN SUBMISSION FILED BY THE LD. CIT(A) AND THE CASE LAWS CITED BY HIM THEREIN. 10.1 AS REGARDS GROUND NO. 1 INVOLVED IN APPEAL NO. 2599/DEL/14, 2600/DEL/14 & 2603/DEL/14 IS CONCERNED WHICH IS RE LATING TO ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A, WE NOTE THAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE MOVED AN APPLICATION DATED 13.12.2012 FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46 ON T HE ISSUES OF RELATING TO THE ADDITIONS MADE BY THE AO U/S. 69C AND 40A(3 ) OF THE ACT AND LD. CIT(A) FORWARDED THE SAME TO THE AO FOR HIS EXAMINA TION AND HIS REPORT ON THE SAME WAS RECEIVED VIDE LETTER DATED 25.9.201 3 AND COPY OF THE REMAND REPORT WAS PROVIDED TO THE ASSESSEE FOR REJO INDER AND IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS REJOINDER ON 12 .12.2013. WE FURTHER NOTE THAT AS THE DOCUMENTS IN THE FORM OF AFFIDAVIT S FURNISHED BY THE ASSESSEE AS ADDITIONAL EVIDENCES ARE VITAL AND GO T O THE ROOT OF THE MATTER, HENCE, THE SAME WERE RIGHTLY ADMITTED BY TH E LD. CIT(A) UNDER RULE 46AT TO DECIDE THE ISSUE ON MERIT. WE FURTHER NOTE THAT LD. CIT(A) HAS RELIED UPON THE DECISION IN THE CASE OF CIT VS. VIRGIN SECURITIES CREDIT P. LTD. (2011) 332 ITR 396 (DEL.) WHEREIN, THE JURI SDICTIONAL HIGH COURT HAS HELD THAT, EVIDENCE WHICH IS CRUCIAL IN DISPOSI NG THE CASE CAN BE 17 ADMITTED. SINCE THE DOCUMENTS FILED BY THE ASSESSE E AS ADDITIONAL EVIDENCES ARE OF THE NATURE THAT MAY ADVANCE THE IN TEREST OF JUSTICE AND VITAL TO DECIDE THE ISSUE UNDER CONSIDERATION, THE SAME NEED TO BE ADMITTED AND CONSIDERED ON MERITS. HENCE, THE DOC UMENTS FILED AS ADDITIONAL EVIDENCE IN THE COURSE OF APPEAL PROCEE DINGS WERE RIGHTLY ADMITTED FOR CONSIDERATION AND ADJUDICATION OF THE ISSUES UNDER CONSIDERATION BY THE LD. CIT(A), WHICH DOES NOT NEE D ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD . CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 1 IN APPEAL NO. 2599/DEL/14, 2600/DEL/14 & 2603/DEL/14. THE CASE LAWS CITED BY THE LD. CIT(DR) ARE DISTINGUISHED ON FACTS. 10.2 AS REGARDS GROUND NO. 2 INVOLVED IN APPEAL NO. 2599/DEL/14, 2600/DEL/14 & 2603/DEL/14 IS CONCERNED, WE NOTE THA T THE AO HAS MERELY RELIED ON THE OBSERVATION OF THE SPECIAL AUD IT REPORT AND MADE THE ADDITION IN DISPUTE. WE FIND THAT THE SPECIAL AUD IT REPORT SIMPLY BASED ON THE OBSERVATIONS REGARDING THE APPLICABILITY OF SECTION 69C ON THE SEIZED MATERIAL WITHOUT VERIFYING THE ACTUAL CONTEN TS THEREOF AND IN TURN THE AO RELIED ON OBSERVATION OF THE SPECIAL AUDITOR TO HOLD THAT THE AMOUNTS MENTIONED IN THE REPORT OF THE SPECIAL AUDI TOR ARE COVERED BY SECTION 69C OF THE I.T. ACT, 1961. IT HAS BEEN SU BMITTED BY THE AR OF THE ASSESSEE THAT THERE WAS NOTHING ON THE SEIZED RECO RDS INDICATE AS TO WHICH YEARS THESE EXPENDITURES WHICH WERE MENTIONED ON THE SEIZED MATERIAL WERE INCURRED. IT IS CONTENDED THAT WHILE TAXING ANY SUM OF MONEY, NECESSARY TO IDENTIFY THE RELEVANT ASSESSMEN T YEAR, WHICH HAS TO 18 BE BASED ON EVIDENCE ON RECORD. THE AR OF THE ASSES SEE ARGUED THAT THERE WAS NOTINGS ON THE SEIZED MATERIAL TO INDICATE THE YEAR IN WHICH THE SUMS OF MONEY IDENTIFIED BY THE AUDIT HAS BEEN EXPENDED . THEREFORE, IT HAS BEEN ARGUED THAT THE ADDITION MADE ON THE SAID CONC LUSION WHICH IS BASED ON SURMISE AND CONJECTURES IS NOT JUSTIFIED AND DES ERVE TO BE DELETED. IT IS NOTED THAT THE ASSESSEE HAS INCURRED EXPENDITURE WH ICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE AO IS DUTY BOUND T O EXAMINE ALL THESE ASPECTS BEFORE REACHING THE CONCLUSION, WHICH HE FA ILED TO DO SO. IT IS ALSO NOTED THAT THE TRANSACTIONS MENTIONED ON THE S EIZED DOCUMENTS WERE ONLY PROPOSALS SENT BY BROKER FOR THE LAND DEAL FOR APPROVAL OF THE MANAGEMENT AND ON THE BASIS OF SUCH ROUGH PROPOSALS NO ADVERSE CONCLUSION SHOULD HAVE BEEN DRAWN BY THE AO. CONSI DERING THE ABOVE, LD. CIT(A) HAS RIGHTLY HELD THAT AO WAS NOT JUSTIFI ED IN MAKING THE IMPUGNED ADDITION MERELY ON THE BASIS OF THE OBSE RVATIONS OF THE AUDITORS WITHOUT GOING INTO THE VERACITY OF THE SAM E, HENCE, THE ADDITION OF RS. 1,63,41,365/- MADE BY THE AO U/S. 69C WAS RI GHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 2 IN APPEAL NO. 2599/DEL/14, 2600/DE L/14 & 2603/DEL/14. THE CASE LAWS CITED BY THE LD. CIT(D R) ARE DISTINGUISHED ON FACTS. 10.3 AS REGARDS GROUND NO. 3 INVOLVED IN APPEAL NO . 2599/DEL/14 IS CONCERNED, WHICH IS RELATING TO DELETION OF ADDITIO N OF RS. 2,04,01,195/- MADE BY THE AO U/S.2(22)(E) OF THE ACT, WE NOTE THA T DURING THE APPELLATE 19 PROCEEDINGS BEFORE THE LD. CIT(A), ASSESSEE FILED A COPY OF ORDER DATED 22.3.2013 IN ASSESSEES OWN CASE PASSED BY THE EARL IER LD. CIT(A) IN APPEAL NO. 37/11-12/-(A)32 FOR THE AY 2007-08 WHERE IN ON IDENTICAL FACTS, AS IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N, THE EARLIER LD. CIT(A) HAD DELETED THE ADDITION OF RS. 44,74,198/- MADE BY THE AO U/S. 2(22)(E) OF THE ACT BY HOLDING AS UNDER:- '5.13 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE LD. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR AND THE FACTS OF THE CASE ON REC ORD. THE ASSESSING OFFICER HAS MADE ADDITIONS IN THE HAN DS OF THE LENDING COMPANIES ON THE BASIS THAT THE MONI ES HAVE BEEN GIVEN AS LOANS TO THE GROUP COMPANIES IN WHICH THERE ARE COMMON SHAREHOLDERS. WHILE CALCULAT ING THE ACCUMULATED PROFITS, THE ASSESSING OFFICER HAS ADDED THE AMOUNT OF ADDITION MADE IN THE ASSESSMENT ORDER TO THE FIGURE OF THE PROFIT AVAILABLE AS PER THE BOOKS OF ACCOUNT. THE ID. AR ARGUED THAT THE APPELL ANT IS A LENDER AND NOT THE BORROWER, THEREFORE T E ADD ITION U/S 2(22)(E) MADE ON PROTECTIVE BASIS IS NOT CALLED FOR IN THIS CASE. THE APPELLANT FURTHER CONTENDED THAT THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF P. K. BAD AM VS. CIT (SUPRA) HAS BEEN APPLIED ENTIRELY ERRONEOUSLY AND EVEN AS PER THE SAID JUDGMENT ITSEL F, THE ACCUMULATED PROFIT DOES NOT MEAN ASSESSABLE OR 20 TAXABLE PROFIT LIABLE TO BE TAXED AS INCOME AND WIL L NOT INCLUDE ANY ADDITION EFFECTED BY THE ASSESSING OFFI CER IN DETERMINING THE TOTAL INCOME. IN THIS REGARD, THE APPELLANT HAS ALSO MADE THE WORKING OF ACCUMULATED PROFITS FOR THE ENTIRE GROUP, BASED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF P.K. BADIAM VS . CIT (SUPRA). (COPY ATTACHED AS PER ANNEXURE 'A'). 5.14 ON BEING ASKED DURING THE APPELLATE PROCEEDING S AS TO WHY THE ACCUMULATED PROFIT IS TO BE ADJUSTED / REDUCED AGAINST THE ADDITIONS MADE U/S 2(22)(E) M T HE EARLIER YEARS, THE APPELLANT RELIED UPON THE JUDGME NTS OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. NARASIMHAN (DEED.) AND OTHERS [1999] 238 ITR 327 (SC) AND THAT OFHON BLE CHENNAI BENCH OF IT AT IN T HE CASE OF ASWANI ENTERPRISES VS. ACIT [2009] 121 TTJ (CHENNAI) (SUPRA). 5.15 AS MENTIONED EARLIER, THE ADDITION IN THE INST ANT CASE WERE MADE IN THE HANDS OF THE LENDER, WHEREAS SECTION 2(22)(E) DOES NOT CONTEMPLATE THE SAME, RAT HER IT PROVIDES FOR THE ADDITION IN THE HANDS OF THE BORROWERS. UNDER SECTION 2(22)(E), THERE IS NO DISTINCTION BETWEEN A LOAN GIVEN FOR THE BUSINESS PURPOSE OR OTHERWISE. MOREOVER, THE APPELLANT HAS N OT 21 BROUGHT ON RECORD ANY COGENT EVIDENCE IN SUPPORT OF ITS CONTENTION THAT THE AMOUNTS ADVANCED WERE FOR BUSINESS PURPOSE. THE SO CALLED MASTER LAND DEVELOPMENT AGREEMENT AMONGST THE VARIOUS AROUP COMPANIES WAS NOT PRODUCED EITHER BEFORE THE ID. AO OR BEFORE THE SPECIAL AUDITORS HENCE THE SAME CANNOT B E RELIED UPON. THEREFORE, IN MY CONSIDERED OPINION, T HE INVOCATION OF THE PROVISIONS OF SECTION 2(22)(E) HA S RIGHTLY BEEN MADE BY THE ASSESSING OFFICER. HOWEVER AS PER THE PROVISIONS OF SECTION 2(22)(E), THE ADDITIO NS ARE REQUIRED TO BE MADE IN THE HANDS OF THE BORROWERS/SHAREHOLDERS INSTEAD OF THE LENDER, HENCE I AM UNABLE UPHOLD THE ACTION OF THE ID. AO MAKING AN ADDITION OF RS.44,74,198/- IN THIS CASE. WITH THE A BOVE OBSERVATIONS, THE ADDITION OF RS.44,74,198/- IS DIR ECTED TO BE DELETED AND ACCORDINGLY, THE GROUND NO. 8 OF THE APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT. 10.3.1 AFTER PERUSING THE AFORESAID FINDINGS OF TH E LD. CIT(A) FOR THE ASSESSMENT YEAR 2007-08 IN ASSESSEES OWN CASE, WE FIND THAT SINCE THE FACTS INVOLVED IN THE ASSESSEES PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE ABOVE CASE IN RESPECT OF ASSESSMENT YEAR 2007-0 8 IN ASSESSEES OWN CASE, HENCE, FOLLOWING THE ABOVE ORDER OF THE EARLI ER LD. CIT(A) OF THE ASSESSMENT YEAR 2007-08 IN THE CASE OF M/S SAMAG CO NSTRUCTION LTD., A COMPANY OF SAAMAG GROUP, LD. CIT(A) HAS RIGHTLY DEL ETED THE ADDITION OF 22 RS. 2,04,01,195/- MADE BY THE AO U/S. 2(22)(E) OF T HE I.T. ACT, 1961 IN THE CASE OF THE ASSESSEE, WHICH DOES NOT NEED ANY I NTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUES IN DISPUTE AND REJECT THE GROUND RAISED BY THE REVENUE . THE CASE LAWS CITED BY THE LD. CIT(A) IN HIS FINDINGS, AS AFORESAID, AR E DIRECTLY APPLICABLE IN THE CASE OF THE ASSESSEE. HOWEVER, THE CASE LAWS CI TED BY THE LD. CIT(DR) ARE DISTINGUISHED ON FACTS. 10.4 AS REGARDS GROUND NO. 3 INVOLVED IN APPEAL NO. 2603/DEL/14 RELATING TO DELETION OF ADDITION OF RS. 40,23,220/- ON ACCOUNT OF CASH PAYMENT FOR PURCHASE OF LAND IS CONCERNED, WE NOTE THAT THE ADDITION IN DISPUTE WAS MADE ON THE BASIS OF THE OBSERVATIONS OF THE AUDITOR MADE IN HIS REPORT U/S. 142(2A), WHICH WERE BASED ON TH E DOCUMENT SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS. WE FURT HER NOTE THAT THE AO OBSERVED THAT THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED, WHICH, FOR THE SAME REASONS AS GIVEN FOR MAKING THE ADDITION OF RS. 26,40,000/- U/S. 69C, WAS NOT FOUND TO BE ACCEPTABLE AND, THERE FORE, THE IMPUGNED ADDITION OF RS. 40,23,220/- WAS MADE U/S. 69C. SIN CE WE HAVE ALREADY CONFIRMED THE FINDINGS OF THE LD. CIT(A) OF DELETIN G THE ADDITION OF RS. 26,40,000/- VIDE PARA NO. 10.2 OF THIS ORDER, HENCE , THE ADDITION IN DISPUTE IS NOT TENABLE, BECAUSE THE SAME WAS MADE O N SURMISES AND CONJECTURES ON THE BASIS OF A DOCUMENT SEIZED DURIN G THE COURSE OF SEARCH WHICH WAS NOTHING BUT WAS A DUMB PAPER ON WHICH ROU GH NOTINGS HAVE BEEN RECORDED WHICH IS NORMAL IN THE REAL ESTATE BU SINESS. HOWEVER, THE AMOUNTS MENTIONED ON THE SEIZED DOCUMENT WAS UNEXPL AINED EXPENDITURE 23 WITHOUT ANALYZING AND VERIFYING THE CONTENTS THEREO F WAS NOT JUSTIFIED, HENCE, THE ADDITION MADE BY THE AO WAS RIGHTLY DELE TED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, T HEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPU TE AND ACCORDINGLY, REJECT THE GROUND RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL NO. 2599/DEL/14 (AY 2 006-07), 2600/DEL/14 (AY 2007-08) & 2603/DEL/14 (AY 2007-08 ) OF THE REVENUE STAND DISMISSED. ITA NO. 4058/DEL/2015 (AY 2011-12) 12. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT I.E. ACQUISITION OF LAND, DEVELOPMENT THEREOF, CONSTRUCTION OF RESIDENT IAL APARTMENTS, COMMERCIAL COMPLEXES ETC. THE ASSESSEE FILED ITS R ETURN OF INCOME ON 30.9.2011 DECLARING A LOSS OF RS. 8,11,002, WHICH W AS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND STATUTORY NO TICES U/S. 143(2) AND 142(1) WERE ISSUED. IN RESPONSE TO THE SAME, THE A R OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FURNISHED N ECESSARY DETAILS, INFORMATION AND DOCUMENTS AS CALLED FOR BY THE AO F ROM TIME TO TIME. THEREUPON, THE ASSESSMENT IN THIS CASE WAS COMPLETE D IN TERMS OF AN ORDER U/S. 143(3) DATED 03.3.3014 AT A TOTAL INCOME OF RS. 1,68,80,020/-, AS AGAINST THE RETURNED LOSS OF RS. 8,11,002/- WHER EIN THE AO MADE AN ADDITION OF RS. 1,76,91,022/- IN THE INCOME OF THE ASSESSEE U/S. 2(22)(E) 24 OF THE I.T. ACT, 1961 ON PROTECTIVE BASIS. AGGRIEVE D BY THE ASSESSMENT ORDER DATED 03.03.2014, ASSESSEE APPEALED BEFORE TH E LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 09.03.2015 HAS ALLOWE D THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNED ORDER DATED 09.3.20 15, THE REVENUE IS IN APPEAL BEFORE US. 13. LD. CIT(DR) RELIED UPON THE ORDER OF THE ASSESS ING OFFICER AND STATED THAT LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN HOLDING THAT THE NOTICE U/S. 142(1) OF THE ACT WAS NOT SERVED U PON THE ASSESSEE WITHIN THE PRESCRIBED TIME LIMIT. HE SUBMITTED THA T THE ASSESSEE VIDE LETTER DATED 30.7.2013 AND 11.11.2013 SUBMITTED THA T THE NOTICE U/S. 143(2) OF THE ACT WAS NOT RECEIVED BY THE COMPANY WITHIN THE TIME SPECIFIED IN THE INCOME TAX ACT FOR SERVICE OF NOTI CE. IN THIS REGARD, IT WAS INFORMED TO THE ASSESSEE THAT THE NOTICE U/S. 143(2) OF THE ACT IN THIS CASE FOR THE ASSESSMENT YEAR 2011-12 WAS ISSU ED ON 25.9.2012 I.E. WITHIN SIX MONTHS FROM THE END OF FINANCIAL YEAR I N WHICH RETURN WAS FURNISHED AND DULY DISPATCHED AND SERVED UPON THE ASSESSEE THROUGH SPEED POST. 14. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASS ED A WELL REASONED ORDER, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THA T AS PR THE PROVISIONS OF SECTION 143(2) OF THE ACT, STATUTORY NOTICE U/S. 14 3(2) OF THE ACT IS 25 REQUIRED TO BE SERVED ON THE ASSESSEE WITHIN 6 MONT HS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION WAS FURNISHED AND IT IS NOT ONLY RE QUIRED TO BE ISSUED WITHIN 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN FOR THE ASSESSMENT YEAR IN DISPUTE WAS FURNISHED. IT M EAN THAT THE ONUS TO PROVE THE SERVICE OF NOTICE WITHIN THE STATUTORY PE RIOD WAS ON THE AO AND NOT UPON THE ASSESSEE. IN THE INSTANT CASE ON CONS IDERING THE FACTS OF THE CASE, THE AO FAILED TO DISCHARGE THE ONUS OF PROVIN G THE SERVICE OF NOTICE UPON THE ASSESSEE U/S. 143(2) OF THE ACT WITHIN THE STATUTORY PERIOD OF LIMITATION. WE NOTE THAT IN THE CASE OF THE ASSESSE E A SPEED POST BOOKING LIST IS LYING IN THE ASSESSMENT RECORD INDICATING T HE ISSUANCE OF NOTICE TO THE ASSESSEE BUT THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT EITHER THE SAME WAS RECEIVED BACK BY THE AO OR THE SAME WAS SE RVED UPON THE ASSESSEE ON OR AFTER THE PRESCRIBED TIME LIMIT. THU S, IN THIS CASE, THE NOTICE U/S. 143(2) OF THE ACT WAS NOT PROVED TO HAV E BEEN SERVED UPON THE ASSESSEE ON OR BEFORE 30.9.2012. THEREFORE, LD . CIT(A) BY FOLLOWING THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE I NCLUDING THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE O F Y. NARAYANA CHETTY VS. ITO REPORTED IN 31 ITR 388 (SC) HAS HELD THAT A NOTICE PRESCRIBED IN SECTION 143(2) OF THE ACT IS NOT MERELY A PROCEDURA L REQUIREMENT. SUCH NOTICE WILL HAVE TO BE SERVED ON THE ASSESSEE WITHI N THE STATE DATE. IF NO NOTICE IS ISSUED OR IF NOTICE IS ISSUED BUT NOT SER VED ON THE ASSESSEE WITHIN THE STATE TIME, THEN THE VALIDITY OF THE PROCEEDING S TAKEN BY THE AO WOULD BE ILLEGAL AND VOID, HAS RIGHTLY HELD THAT SINCE TH ERE WAS NO SERVICE OF 26 NOTICE U/S. 143(2) OF THE ACT WITHIN STATUTORY TIME LIMIT IN THIS CASE, THE PROCEEDINGS INITIATED THEREAFTER WERE NULL AND VOID AS IT WAS ASSUMPTION OF JURISDICTION WITHOUT FOLLOWING THE PROCEDURES LA ID IN THE ACT AND ACCORDINGLY, QUASHED THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN THIS CASE AS NULL AND VOID, WHICH DOES N OT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY THE REV ENUE. IN THE RESULT, THE REVENUES APPEAL STAND DISMISSED. 16. IN THE RESULT, ALL THE 04 APPEALS I.E. ITA NOS. 2599/DEL/14 (AY 2006-07) (DCIT VS. SAAMAG CONSTRUCTION LTD.); 2600 /DEL/14 (AY 2007-08) (DCIT VS. SAAMAG INFRASTRUCTURE LTD.; 2603 /DEL/14 (AY 2007-08) (DCIT VS. SAGA DEVELOPERS (P) LTD.) AND 40 58/DEL/2015 (AY 2011-12) (DCIT VS. SAAMAG DEVELOPERS LTD. FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED ON 08/07/2019. SD/- SD/- [B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER SR BHATNAGAR DATE: 08/07/2019 COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES